FactSet (FDS) Finds Buyer For Its Market Research Businesses

After months of searching, FactSet Research Systems Inc. (NYSE:FDS) has finally found a buyer for Market Metrics and Matrix Solutions – the company’s market research businesses that focus on advisor-sold investments and insurance.

The Business Information Services provider recently announced that it has entered into a definitive agreement to sell the aforementioned businesses to Asset International, a portfolio company of Genstar Capital, for a total cash consideration of $165 million. Apart from this, the company will receive an earn-out of $10 million which depends on achieving certain growth targets over two years.

FactSet had acquired Market Metrics in mid-June 2010 for a total consideration of $55 million. Market Metrics conducts surveys on brokers, research analysts and advisors every year. These databases and reports are used by the senior management of different companies for formulating strategies.

In January, Bloomberg had reported that FactSet is looking for a potential buyer for Market Metrics. At that time, it was anticipated that Broadridge Financial Solutions Inc. (NYSE:BR) would make an offer.

FactSet intends to use the proceeds from the transaction to buy back shares. Notably, on May 19, the company had announced the expansion of its existing repurchase authorization by $165 million. The transaction is anticipated to be completed in the fourth quarter of fiscal 2016. This will not have a material impact on the company’s financials.

It should be noted that FactSet is committed to maximize its shareholders' wealth. In fiscal 2015, the company spent $256.2 million on share repurchases and distributed $66.6 million as dividends. Continuing the same strategy, FactSet returned approximately $113.3 million through share repurchases and paid $36.1 million as dividend during the first two quarters of fiscal 2016. These shareholder-friendly initiatives not only instil investors’ confidence but also boost earnings per share.

Nonetheless, competition from Bloomberg, Dow Jones & Company Inc., MSCI Inc. (NYSE:MSCI) and Thomson Reuters Corp. (TO:TRI) , which are also coming up with substitute products at competitive prices, is a headwind for the company.